Consumer’s Equilibrium (Utility Analysis)
Q1. Establish the relationship between Total Utility and Marginal Utility with the help of
following information.
Units of oranges consumed 1 2 3 4 5 6 7
Total Utility (Units) 10 18 23 25 26 26 23
Q2. How many units of a commodity should a consumer buy to get maximum utility if the
market price of each unit of orange is Rs 4.
Units of oranges consumed 1 2 3 4 5
Marginal Utility (in Rs) 10 8 6 4 2
Q3. Suppose a consumer’s income is Rs 30 which he wants to spend on two goods X and
Y. The price of each unit of X and Y is Rs 4 and Rs 2. Marginal Utility schedule of X and Y
is given as below. Find consumer’s equilibrium.
units 1 2 3 4 5 6 7 8 9 10
MUx 80 72 64 56 48 40 32 24 16 8
MUy 40 38 36 34 32 30 28 26 24 22
Q4. A consumer consumes only two goods X and Y whose prices are Rs 4 and Rs 5 per unit
respectively. If the consumer chooses a combination of the two goods with marginal utility
of X equal to 5 and that of Y equal to 4, is the consumer in equilibrium? Give reasons.
What will a rational consumer do in this situation? Use utility analysis.
Q5. A consumer consumes only two goods X and Y whose prices are Rs 5 and Rs 4 per unit
respectively. If the consumer chooses a combination of the two goods with marginal utility
of X equal to4 and that of Y equal to 5, is the consumer in equilibrium? Why or why not?
What will a rational consumer do in this situation? Use utility analysis.
Q6. A consumer consumes only two goods X and Y whose prices are Rs 2 and Rs 1 per unit
respectively. If the consumer chooses a combination of the two goods with marginal utility
of X equal to 4 and that of Y equal to 4, is the consumer in equilibrium? Give reasons.
What will a rational consumer do in this situation? Use utility analysis.
Q7. A person’s total utility schedule is given below. Derive his marginal utility schedule.
Amount consumed 0 1 2 3 4 5
Total Utility (Units) 0 10 25 38 48 55
Q8. Complete the following table:
Units consumed 1 2 3 4 5
Total Utility 25 45 - 70 75
Marginal Utility 25 - 15 - -
Q9. Given below is the utility schedule of a consumer for commodity X. The price of the
commodity is Rs 6 per unit. How many units should the consumer purchase to maximize
satisfaction. Assume that the utility is expressed in utils. Give reasons for your answer.
Units consumed 1 2 3 4 5 6
Total Utility 10 18 25 31 34 34
Marginal Utility 10 8 7 6 3 0
Q10. A person’s MU schedule is given below. Derive its TU schedule (Assume that TU of
consuming zero unit is zero) :
Amount consumed 1 2 3 4 5 6
Marginal Utility 10 8 6 3 2 1
Q11. Explain the Law of Diminishing Marginal Utility with the help of a utility schedule.
